Liberum hikes Pets at Home price target after interims

28th Nov 2019 13:44

(Sharecast News) - Liberum lifted its price target on shares of Pets at Home to 300p from 240p on Thursday following the company's interim results earlier in the week.
The broker said the results confirmed its "optimism and anti-consensus" 'buy' rating.

"The continued turnaround is one of the most impressive we have seen within the UK retail sector," it said.

"There are plenty more levers to pull, including growing subscriptions, improving Retail/Vets cross-shop and using data to drive customer spend. We think there is a potential incremental revenue pool of circa £2.4bn for PETS to go for through its more than 5m VIP customer base."

Liberum said there is still another valuation step-up to come, supported by momentum in Retail and the Vet Group restructuring, which seems to be going "very much to plan".

"The latter should help deliver stronger, more sustainable free cash flow generation, meaning that special returns could come sooner rather than later," it added.

On Tuesday, Pets at Home reported a jump interim profit and said it was on track to deliver annual pre-tax profit towards the top end of market views.

At 1350 GMT, the shares were up 3.5% at 256.60p.